Laws of the People's Republic of China

DETAILED RULES AND REGULATIONS FOR THE IMPLEMENTATION
OF THE REGULATIONS ON ADMINISTRATION OF TECHNOLOGY
IMPORT CONTRACTS OF THE PEOPLE'S REPULBIC OF CHINA

  (Approved by the State Council on December 30, 1987)
(Promulgated by the Ministry of Foreign Economic Relations and
Trade on January 20, 1988)

 

 

SUBJECT: SCIENCE & TECHNOLOGY

ISSUING-DEPT: MINISTRY OF FOREIGN ECONOMIC RELATIONS & TRADE

ISSUE-DATE: 01/20/1988

IMPLEMENT-DATE: 01/20/1988

LENGTH: 3156 words

TEXT:

[Article 1] The present set of regulations is formulated in accordance with the stipulation of Article 12 of the "Regulations on Administration of Technology Import Contracts of the People's Republic of China" (hereinafter referred to as the "Regulations").

[Article 2] Hereunder-listed technology import contracts signed between the recipient and the supplier and specified in Article 2 of the "Regulations" shall apply for examination and approval from the competent authority in accordance with the "Regulations" and the present set of Regulations regardless of the country or region where the supplier belonged, source of funds and way of payment by the recipient:

(1) Contracts for transferring or licensing of industrial property rights: Contracts for transferring or licensing of industrial property rights refer to those for transferring or licensing of rights relating to invention patents, new utility model patents, exterior design patents as well as trademarks but excluding those for transferring of pure trademarks.

(2) Contracts for licensing of technical know-how: Contracts for licensing of technical know-how refer to those for provision or impartment of a certain technical knowledge which has not been made public and is used for manufacturing a certain product, or applying a certain technology, as well as a product design, a technical process, a formula, quality control and management skills and such technical knowledge has not yet obtained the legal protection of industrial property rights.

(3) Contracts for technical services: Contracts for technical services refer to those contracts under which the supplier provides services or consultations to the recipient with its technology to achieve a specific goal.êê That may include contracts of feasbility study or engineering design conducted by the supplier under an appointment or cooperation agreement with the recipient, those for provision of technical services by foreign geological exploration or engineering team(s) employed by the recipient and those for provision of services or consultations by the supplier entrusted by the recipient on the enterprise's technical transformation, improvement of production technology or product design and quality control as well as the enterprise's management etc (but excluding those for employing foreigners to work for the Chinese enterprise as a staff).

(4) Contracts for co-production and co-design that contain any one of the contents as transferring or licensing of industrial property rights, licensing of technical know-how or technical services;

(5) Contracts for importing complete set of equipment, production line and key equipment that contain any one of the contents as transferring or licensing of industrial property rights, licensing of technical know-how or technical services;

(6) Other technology import contracts which need to go through the procedure of examination and approval in the view of the competent authority.

[Article 3] To import technologies, companies, enterprises, institutions or individuals who have no right to do technology import business with foreign suppliers shall entrust, with a letter of commission, those with the said right to sign the technology import contracts with the foreign suppliers on their behalf.

[Article 4] Technology import contracts signed by Chinese-foreign equity joint ventures, Chinese-foreign co-operative ventures and wholly foreign-owned enterprises (hereinafter referred to as "foreign investment enterprise(s)") established in the territory of the People's Republic of China for acquiring technologies from suppliers, shall go through the procedure of examination and approval in accordance with stipulations of the present set of Regulations.

The foreign investors of a foreign investment enterprise take the industrial property rights or technical know-how as equity share may be dealt with in accordance with the related laws and regulations of the State on foreign investment enterprises.

[Article 5] The competent authorities for examining and approving technology import contracts are the Ministry of Foreign Economic Relations and Trade (hereinafter referred to as the MOFERT) and those MOFERT authorized foreign economic relations and trade departments, commissions, bureaus and other administrative organs of provinces, autonomous regions, municipalities directly under the Central government, coastal open cities, special economic zones and cities which have their independent economic development plans and are under the administration of a certain province (hereinafter referred to as the Approval Authority).

[Article 6] Technology import contracts of different status shall be examined and approved by the corresponding Approval Authority in accordance with the following stipulations:

(1) Technology import contracts whose feasibility studies are approved by ministries/commissions of or departments directly under the State Council shall be examined and approved by the MOFERT.

(2) Technology import contracts whose feasibility studies are approved by the people's governments or other authorized and responsible organs of provinces, autonomous regions, municipalities directly under the Central government, coastal open cities, special economic zones and cities which have their independent economic development plans and are under the administration of a certain province shall be examined and approved by the corresponding Approval Authority.êê If a technology import contract is signed by a trans-regional company on a commission basis, the contract signed shall be examined and approved by the Approval Authority of where the commissioned company signed the contract subject to consent from the Approval Authority of where the assignor is located.êê After approval is granted, the Approval Authority of where the commissioned company signed the Contract shall send a duplicate of the Approval Certificate to the Approval Authority of there the assignor is located for the record. However, technology import contracts signed by companies in Beijing (excluding companies which are directly under the jurisdiction of Beijing Municipality) on a commission basis from an assignor outside Beijing shall be examined and approved by the MOFERT.

(3) Technology import contracts signed by foreign investment enterprises for acquiring technologies from suppliers are to be examined and approved by the MOFERT If the foreign investment enterprises are established with the approval of ministries/commissions of or departments directly under the State Council.êê Other foreign investment enterprises' technology import contracts shall be examined and approved by the respective Approval Authority.

[Article 7] The following items shall be specified in a technology import contract:

(1) Name of the contract;

(2) Contents, scope and requirements of the goal-directed to-be-imported technology;

(3) Criteria, time-limits and measures for goal-reaching checking purposes of the to-be-imported technology and the undertaking of risks and responsibilities;

(4) Confidentiality obligations for the to-be-imported technology, ownership and the sharing of the improved parts;

(5) Price or pay in total, break-down prices and terms for payment;

(6) Measures on how to estimate an amount for compensation in case of violation of contract;

(7) Methods for solving disputes, and

(8) Interpretations for terms and phrases.

Appendices relating to the implementation of the contract can be considered as an integral part of the technology import contract subject to agreement of the two parties concerned.

[Article 8] Technology import contracts relating to transferring or licensing of patent or trademark rights obtained in China shall state the related patent numbers or patent application numbers, trademark registration numbers and shall be attached with samples.êê If they belong to ones for transferring a certain patent, they shall be recorded in the Patent Office in accordance with stipulations of the "Patent Law of the People's Republic of China".êê If they belong to ones for licensing a certain trademark, they shall be recorded in the Trademark Office in accordance with stipulations of the "Trademark Law of the People's Republic of China".

[Article 9] The supplier shall ensure that the technology or data documents it provided are complete, accurate, effective and capable of accomplishing the technical targets specified in the technology import contract.êê The time-limit for the delivery of the said documents shall be able to accomodate the progress of the engineering work planned by the recipient.

[Article 10] Prices of raw materials, spare parts or equipment the receipient needs to import from the supplier for the imported technology shall not be higher than those of similar products in the international market.

[Article 11] The supplier shall ensure that it is the rightful owner of the technology provided or it has the right to transfer or license the said technology.êê If the recipient is accused of infringement by a third party when producting or selling products which are manufactured by the transferred or licensed technology, the supplier is responsible for coping with the lawsuit.êê If the infringement accused by the third party comes into being, all economic losses that the recipient may suffer shall be borne by the supplier.

[Article 12] During the period of validity of the technology import contract, the ownership of an improved version of the imported technology including claims for patent rights shall belong to the party which undertakes the improvement work.êê When the recipient provides an improved version of the imported technology to the supplier, the terms shall be the same as that when the supplier provides an improved version to the recipient.

[Article 13] The recipient shall undertake the obligation to keep confidential the technical secrets of a certain know-how and relevant information provided or imparted by the supplier in accordance with the scope and confidentiality duration stipulated in the technology import contract.êê The confidentiality duration shall not exceed the period of validity of the said contract. If it is necessary to go beyond the contract validity period due to some special conditions, specific provisions should be included in the said technology import contract and an explanation should be made to the Approval Authority when applying for examination and approval of the said contract.

The recipient shall be relieved of all confidentiality obligations if the technical secrets of the imported technical know-how or relevant information are made public during the confidentiality duration not owing to the recipient. If it is specified in the technology import contract that the supplier is required to provide products developed by or improved version(s) of the imported technology to the recipient during the contract validity period, the recipient may continue to bear the obligation to keep confidential the technical secrets of the developed products or improved version(s) of the technology after the validity of the said contract has lapsed.êê However, the additional confidentiality duration (that overlaps the original duration) shall not be longer than the confidentiality duration previously approved in the technology import contract and the additional confidentiality duration shall become effective on the date the developed products or improved version(s) of the technology are provided to the recipient.

[Article 14] No restrictive provision on the recipient who manufactures export products using the imported technology can be included in a technology import contract without the approval from the competent authority unless any one of the following situations apply:

(1) In countries and regions where exclusive license cotnracts have been signed by supplier of the said technology;

(2) In countries and regions where sole agent contracts have been signed by the supplier of the said technology.

[Article 15] No prohibitive provision on the recipient to continue to use the imported technology after the validity of the technology import contract has lapsed shall be included in the said contract without the approval from the competent authority. In case the validity of the said contract has lapsed but not the patent relating to the imported technology, it may be handled according to the relevant stipulations of the "Patent Law of the People's Republic of China".

[Article 16] The supplier shall pay taxes according to the stipulations of the Tax Law of the People's Republic of China.

[Article 17] The recipient or company, enterprise which has been authorized to act as its agent to sign technology import contract on behalf of the recipient shall according to the stipulations of Article 6 of the present set of Regulations submit the following official documents to the competent authority within 30 days from the date the said contract is signed:

(1) an approval application form including the contract's name, supplier's country and the company's name, contents and scope of the goal-directed to-be-imported technology, and the approval organ and the report number of the approved project's feasibility study, etc.;

(2) a copy of the contract (enclosing a Chinese version if it is in a foreign language);

(3) copy of documents evidencing the legal status of all contractual parties;

(4) the approved feasibility study and a report on the arrangement of fund needed.

In order to raise the efficiency of examiniation and approval, the recipient or company, enterprise which has been authorized to act as its agent to sign technology import contract on on behalf of the recipient may ask for comments or apply for pre-examination from the competent authority on the main contents or certain clauses of the technology import contract during or before the negotiation period.

[Article 18] In accordance with the stipulations of Article 17 of the present set of Regulations, if any one of the following cases is applied to a technology import contract or other documents submitted, the competent authority may require for amendments within a certain time limit.êê If the parties concerned have failed to make the necessary amendments, the competent authority may reject the contract submitted:

(1) That it is against the current laws and legislations of the State and is harmful to public interests of the society;

(2) That it is against national sovereignty;

(3) That the contents of the contract is inconsistent with the approved feasibiltiy study of the project;

(4) That the basic clauses and contents of the contract are imperfect;

(5) That the contract contains no definite and rational stipulation concerning the responsibilities and solutions to possibly occurred disputes of property rights due to the transferred or licensed technology or other disputes that may occur in the course of implementation of the contract;

(6) That the contract contains no rational stipulation on the technical level and economic efficiency which the transferred or licensed technology should attain as well as quality warranty for the products manufactured with the said technology;

(7) That the price and/or way of payment for the imported technology is/are unreasonable;

(8) That the stipulations on rights, responsibilities and obligations of the contractual parties are unclear, unequal and irrational;

(9) That the contract contains preferential tax commitment without the consent from the Chinese tax authority.

[Article 19] The competent authority shall determine whether to approve or reject a technology import contract within 60 days from the date when the application is received.êê If the competent authority requires an amendment in accordance with the stipulations of Article 18, the duration of examination and approval will be counted from the date when the amended contract or text is received by the competent authority.

A contract submitted for examination and approval will be considered approved if the competent authority has failed to give a reply within the stipulated time limit.

[Article 20] The approved technology import contract will come into force on the date of approval. The competent authority will issue an "Approval Certificate for Technology Import Contract" which is to be printed and numbered by the MOFERT in a unified manner.

[Article 21] If a technology import contract exceeds the ten year validity period stipulated in Article 8 of the "Regulations" or includes restrictive provisions as listed in Article 9 of the "Regulations", the recipient shall submit together with the contract approval application a detailed explanation to the competent authority when going through the procedures for examination and approval in accordance with the stipulations of the present set of Regulations.

[Article 22] To alter provisions relating to contents, prices, terms and confidentiality duration of an already approved goal-directed technology import contract, the contractual parties shall undergo consultations and reach a mutual agreement first.êê They shall then apply for a written consent from the original Approval Authority.êê If the alteration is found to be inconsistent with the contents of the already approved goal-directed technology import contract or it needs more foreign exchange than the amount previously approved, the contractual parties shall go through a reexamination and reapproval procedure in accordance with the provisions of Article 4 and Article 11 of the "Regulations" and Article 6 of the present set of Regulations.

[Article 23] All Approval Authority shall submit copies of "Approval Certificate of Technology Import Contract" and other relevant documents to the MOFERT for the record within 10 days from the date the technology import contract is approved.

[Article 24] In going through such processes as acquiring bank guarantee, letters of credit, payment, account clearance, Customs declaration and tax payment, etc when implementing a technology import contract, the "Approval Certificate of Technology Import Contract" or its duplicates must be presented to the related organs in accordance with the relevant stipulations.êê Banks, Customs offices and tax authorities may refuse to process an application if otherwise.

[Article 25] The authority to interpret and revise the present set of Regulations resides in the MOFERT.

[Article 26] The present set of Regulations will enter into force on the date of promulgation.êê The "Procedure for Examination and Approval of Technology Import Contracts" promulgated on September 18, 1985 by the MOFERT will cease to be in force simultaneously.